Bitcoin, cryptocurrencies, blockchain: 3 buzzwords that have been hailed by enthusiasts as holding a revolutionary promise.
While the jury is still out when it comes to the future of Bitcoin and cryptocurrencies, it seems that blockchain has gained its status as a technology with massive potential to change the world. Since its inception in 2008, the market has undergone a long process of exploring which use cases are best served by this technology. Bitcoin was among its first applications, but the true blockchain power is yet to be unleashed.
Giant companies in the technology field including IBM, Google, Visa and Microsoft are aware of its advantages and invest heavily in research and development to tap into blockchain’s potential. Also, forecasts on its future use are optimistic: according to IDC, industries are set to double spending on this technology and reach USD 2.1 billion in 2018.
Given its flexibility, blockchain can be adopted across various industries, replacing outdated models, turning them more secure, less time consuming and more transparent. Let’s look at some interesting examples of blockchain technology applications within and beyond financial services.
Banking, cross-border payments
The financial services industry was among the first to implement blockchain technology (see the Bitcoin case ). Now banks have also become aware of its disruptive potential. Some are devising or testing ways to implement it into their operations. Others have already started integrating such technology. For example, Barclays uses blockchain for its back-office operations and settlements.
Predictions for further development are already promising. A Financial Times report indicates that blockсhain technology in this field can reduce up to USD 20 billion in third-party costs. Another study released by Santander FinTech mentions that banks should expect yearly reductions in infrastructure costs between USD 15 billion and USD 20 billion by 2022.
Honorable mention: Ripple provides a global real-time payment system, enabling banks and financial institutions to transact with each other without the need for a central correspondent.
Cross-border payments represent nearly 40% of global payments transactional revenues with payment flows of over USD 135 trillion registered in 2016. However, the current protocol is susceptible to various shortcomings (related to costs, time and security), as well as structural weaknesses. For example, according to data released by McKinsey, completing a cross-border transaction can take 3 – 5 business days on average. Frustration with all these factors has led to financial institutions and banks adopting blockchain for faster cross-border payments at lower costs and higher security.
Honorable mention: SWIFT (Society for Worldwide Interbank Financial Telecommunications) has recently completed a “proof of concept” test of blockchain technology to reconcile international payments between the accounts of 34 banks.
Blockchain may not solve the online identity challenge alone, but the possibilities it offers can significantly make an impact. Decentralization improves privacy and the security of stored data, as compared to storing records with a central authority, which is more vulnerable to attacks. With blockchain, people gain more proactive control over their data.
Blockchain startups are exploring decentralized data management systems more and more. One way to achieve this is by joining forces with financial services, technology companies or government organizations to reduce the number of cyber-attacks and identity fraud cases.
Honorable mention: Civic is a decentralized platform for verifying an individual’s identity with blockchain technology. The company provides a single solution for finance, ecommerce, e-signatures, medical records, and social profiles. Its identity platform uses a verified identity for multi-factor authentication on the internet and mobile apps without the need for usernames or passwords.
The blockchain revolution has made its way to the healthcare industry. There is a massive opportunity to increase the security, privacy and interoperability of health data via this technology.
A blockchain-powered healthcare system could create a database of health information that doctors and providers could access irrespective of the electronic medical system used. It would ensure higher security and privacy, efficient sharing of research results as well as billing and payments management.
An IBM study titled Healthcare Rallies for Blockchain found that blockchain is expected to be adopted by 56% of healthcare executives by 2020. However, even if the opportunities are many, such business models are still work in progress.
Honourable mention: MedRec is using blockchain technology to solve issues with electronic medical records, with the help of a decentralized CMS.
The theory of using blockchain technology during elections has been around for a while, as it would allow governments to limit electoral fraud, increase security and provide transparency. Votes could be captured as transactions through blockchain, governments and voters would ensure no votes are changed or removed and no illegitimate votes are added.
While the advantages are clear (reduced voter and government fraud, identity validation , digitalization of most processes), the actual technicalities of making this process are for now out of reach. Blockchain could ultimately change the way we vote, but in the near term, its strongest potential may be in organisational rather than national contexts. Indeed, they have been used for the internal elections of political parties, and shareholder votes in Estonia, Denmark and Norway.
Honourable mention: Follow my Vote is a developer of blockchain voting software for use in government-sponsored elections globally.
Blockchain technology allows the HR department to better organize records, gain access to relevant details about job applicants and their previous work experience. At the same time, the latter have control of their documents, which allows them to avoid misinterpretations.
Honourable mention: ChronoBank enables recruiters to get access to a pool of candidates with verified records. Both HR professionals and candidates can make payments via a decentralized framework that doesn’t involve other parties.
To conclude, blockchains can be applied to many industries to improve efficiency, security and operations. However, it is also worth mentioning that we are still in the early days of a complete restructuring of numerous processes and operations that could be decentralized. And even if we cannot predict a precise trajectory or the future impact of blockchain, we should also not ignore these early development stages and successes along with failures. After all, today’s fiction could become tomorrow’s reality, just like yesterday’s fiction is today’s reality.